Health and Indigenous Affairs Correspondent

Simon McKeon: "It would be a tragedy if this fund did not happen, simply because the funding mechanism was not agreed to in Parliament." Photo: Jesse Marlow

CSIRO chairman and former Australian of the Year Simon McKeon says it would be a ''tragedy'' if opposition to the proposed $7 Medicare co-payment prevented the creation of a $20 billion medical research fund.

The Abbott government is proposing a medicare research fund to be funded by a range of health savings, including the $7 Medicare charge, a $5 increase in patient payments for pharmaceuticals, and reductions in public hospital funding.

But with Labor, the Greens and the Palmer United Party fiercely opposed to the $7 fee, the proposal appears unlikely to pass Parliament.

Addressing the National Press Club in Canberra on Wednesday, Mr McKeon, who also chaired a strategic review of health and medical research for the Gillard government, backed the assessment of Health Minister Peter Dutton that change was necessary to control growth in health spending.

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''The government is saying, I think quite correctly, that if we don't do anything to our broader health system, it is unsustainable. They're absolutely right,'' he said.

Mr McKeon suggested people would be happier about paying the $7 fee, which would also apply to pathology and diagnostic imaging services, if they were reminded that the savings were being directed to medical research.

''I think it's going to be a good thing if 20-odd million Australians feel that they're actually directly part of the research effort by that payment,'' he said.

Mr McKeon said he was hopeful that the government could strike a ''funding peace package'' with crossbench senators which would allow the fund to proceed.

''It would be a tragedy if this fund did not happen, simply because the funding mechanism was not agreed to in Parliament,'' he said.

Senate estimates hearings last week revealed health department officials only began work on the fund in April, just weeks before the budget, and the National Health and Medical Research Council, which is the primary intended beneficiary of the fund, was not consulted about it.

But Mr McKeon said it was a positive that few details of the fund had been decided, and urged the government to consult widely with researchers on how it should operate.

''The fund is not ready to be spent today - there is time to get it right,'' he said.

For his part, Mr McKeon urged the government not to confine too narrowly the kinds of research that could be supported by the fund, emphasising the importance of research on the health system itself.

''Yes, we need a cure for cancer, as has been emphasised by the Treasurer – but frankly the intelligent approach, which will generate superior returns for the health of a nation, let alone the health of our economy, necessitates a broader focus.''

Mr McKeon noted wealthy Australians were less generous than their counterparts in the United States when it came to supporting medical research or other philanthropic endeavours, calling it ''staggering'' that, according to the Australian Tax Office, about 40 per cent of Australians who earn more than $1 million a year do not apply for a tax deduction for charitable giving.

Australian Medical Association president Brian Owler said linking the medical research fund to cuts to the Medicare fee was a bad idea.

''The AMA very much supports extra funding for research but taking money from the primary healthcare system and putting it into tertiary level research is not the answer to the sustainability of the healthcare system,'' Associate Professor Owler told reporters in Canberra on Thursday.